UK’s Co-Operative Bank Warns of Major IT Upgrade Needs

The UK’s Co-operative Bank has stated that its IT platform needs major upgrades as the existing infrastructure is “unsuitable and inherently fragile.” In 2014, the Bank commissioned an independent report after a calamitous IT re-platforming project that contributed to a £300 ($471) million write-off and nearly pulled the bank under. The Co-operative Bank has since outsourced many IT capabilities to IBM and Capita but still questions linger.

In a follow up report released this week, the Co-Operative Bank wrote,

“Across the Bank’s IT infrastructure there are varying levels of resilience and recoverability and whilst a basic level of resilience to technical component failure is in place, the Bank does not have a proven end-to-end capability to recover from a significant and prolonged data centre outage. Until that work is completed the Bank is exposed to a higher risk of an IT failure causing material disruption to the Bank’s products and services. There are considerable execution risks in a project of this scale and complexity, including the risk that costs may exceed those originally contemplated.”

The Co-Operative Bank is not alone in its position. Around the world, established players are struggling to cope with new IT demands while still running on legacy systems. As a result, banks that are willing and can afford to upgrade core IT systems to adapt and use as a springboard for new banking and payment products have a better chance of surviving over the long run as the payments industry continues to evolve.